Washington Dairygrams - September 25, 2012

As printed in our September 25, 2012 issue...

GLOBAL PRODUCT PRICES WERE $1.44 per pound in early September trading at the Global Dairy Trade. Those composite index values are up 6 cents since late August and up 19 cents from a mid-July low point.

SPOT BUTTER WAS TRADING AT $1.83 which is 3 cents off its 2012 high. Meanwhile, CME blocks exchanged for $1.83 at close. Class III future prices for October through March averaged $19.32.

PRODUCT USE STRONG . . . up 2.4 percent through the first half of the year. Butter disappearance climbed 4.1 percent on top of last year’s robust gains. Italian cheese rose 1.2 percent and American grew 0.8.

DAIRY EXPORTS DROPPED IN JULY for the first time since October 2009. Total value was $401 million, down 1 percent, when compared to last year. The top two markets, Mexico and Southeast Asia, fell by double digits.

THE FARM BILL IS IN LIMBO with only eight scheduled legislative days in September. Passage appears unlikely as it is being held up in the House.

SHOULD CALIFORNIA join the Federal Milk Marketing Order system? That was the focus of a mid-September question-and-answer meeting where its state milk order was compared to the federal system.

THE IDEA HAS PICKED UP MOMENTUM due to the growing disparity between prices for milk used in manufacturing cheese and whey within California compared to those nationally. One co-op estimated that disparity cost an average 1,000-cow California dairy $380,000 since 2010.

AUGUST MILK:FEED RATIO hovered near a record low at 1.35. Was 1.83 last August. Feed costs were 13.19 per hundredweight of milk with income over feed cost of $4.61 compared to $10.02 the same time a year ago.

OVER HALF OF THE NATION’S CORN CROP (52 percent) was rated as very poor to poor while only 36 percent of soybeans fell into that category.

THE ALFALFA HARVEST in California, the nation’s top alfalfa producing state, rose 9.7 percent on 11.4 percent more acres through August compared to a year ago. In contrast, Wisconsin’s crop plummeted 28 percent on 13 percent less land. Nationwide, alfalfa tonnage is down 16 percent.

NEW ZEALAND’S PRODUCTION SEASON is off to a fast start with milk plants reporting higher volumes compared to the same time a year earlier. In the last cycle, the Kiwi’s milk output was up 10.3 percent.

BRIEFLY: An emergency petition for price relief was denied by the California Department of Food and Agriculture. Lawsuit now filed. Aurora Dairy settled a $7.5 million lawsuit filed by organic community. Claimed no wrongdoing and maintains its organic certification is not in question. Dairy culling is up over 100,000 head through late August; year-to-date total was 1.918 million cows. The European Commission is now studying potential market interactions when quotas phase out in 2015.